Helios Underwriting — Interim results deliver long-awaited upswing

Helios Underwriting (AIM: HUW)

Last close As at 23/05/2024

GBP1.65

−2.50 (−1.49%)

Market capitalisation

GBP124m

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Research: Financials

Helios Underwriting — Interim results deliver long-awaited upswing

Helios Underwriting reported H123 EPS of 5.7p, a meaningful turnaround from a 4.4p loss in H122 and a 4.9p loss in FY22. It benefited from a much-improved combined ratio of 88% (H122: 95%) and a turnaround in syndicate investment income, supported by 28% growth in gross written premiums (GWP). It recorded a 4.8% increase in underwriting capacity, to £310.8m, thanks to acquisitions and new investment. Group investment income lagged in H123 but is forecast to deliver strongly in H223 and into FY24. This resulted in a small reduction in our FY23 EPS forecast from 15.1p to 14.6p, but thanks to increases for FY24 and FY25, benefiting from share buybacks, our valuation remains unchanged at 252p/share, a 46% premium to our FY23e net asset value (NAV) and double the current share price. As the forced sell-off by Odey Asset Management is completed, a more liberal dividend policy and further buybacks should be supportive.

Marius Strydom

Written by

Marius Strydom

Analyst

Financials

Helios Underwriting

Interim results deliver long-awaited upswing

H123 results update

Insurance

10 October 2023

Price

129p

Market cap

£99m

Net cash (£m) at 30 June 2023

13.2

Shares in issue

76.7m

Free float

53.7%

Code

HUW

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

1.2

(19.4)

(13.4)

Rel (local)

1.8

(21.2)

(18.4)

52-week high/low

175p

115p

Business description

Helios Underwriting was established in 2007 (as Hampden Underwriting) primarily to provide investors with a limited liability direct investment into the Lloyd’s insurance market. It is an AIM-quoted holding company, providing underwriting exposure across a diversified portfolio of selected Lloyd’s syndicates.

Next events

2024 capacity update

January 2024

Analyst

Marius Strydom

+44 (0)20 3077 5700

Helios Underwriting is a research client of Edison Investment Research Limited

Helios Underwriting reported H123 EPS of 5.7p, a meaningful turnaround from a 4.4p loss in H122 and a 4.9p loss in FY22. It benefited from a much-improved combined ratio of 88% (H122: 95%) and a turnaround in syndicate investment income, supported by 28% growth in gross written premiums (GWP). It recorded a 4.8% increase in underwriting capacity, to £310.8m, thanks to acquisitions and new investment. Group investment income lagged in H123 but is forecast to deliver strongly in H223 and into FY24. This resulted in a small reduction in our FY23 EPS forecast from 15.1p to 14.6p, but thanks to increases for FY24 and FY25, benefiting from share buybacks, our valuation remains unchanged at 252p/share, a 46% premium to our FY23e net asset value (NAV) and double the current share price. As the forced sell-off by Odey Asset Management is completed, a more liberal dividend policy and further buybacks should be supportive.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/22

148.3

(5.2)

(4.9)

3.0

N/A

2.3

12/23e

213.5

14.9

14.6

6.0

8.8

4.7

12/24e

250.7

28.3

27.7

13.7

4.7

10.6

12/25e

293.9

34.9

34.1

16.8

3.8

13.0

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Strong top-line growth and further upside

Strong GWP growth of 28% was delivered thanks to 27% capacity growth in FY22. Helios added a further 4.8% capacity growth in H123 as it resumed limited liability vehicle (LLV) acquisitions (four transactions adding £8.2m) and an investment in the Wildfire Defense Syndicate (WDS), providing fire risk cover to companies in California (adding a further £6m). The company expects syndicate pre-emptions for the year of £14.5m, driving our full-year capacity forecast growth of 10% (to £326m, of which £261m is forecast to be retained).

Strong operational result, despite one-offs

Thanks to a much-improved combined ratio of 88% on a strongly growing book of business, the H123 results provided the expected operational turnaround in support of our healthy EPS forecasts for FY23 and beyond. A very strong syndicate underwriting operating result, including a sharp turnaround in investment income, was supported by very healthy reinsurance income, but this was offset by higher expenses as the company invested in its portfolio evaluation and monitoring (PEM) initiative and affected by a one-off weak investment result on group assets.

Valuation: 252p/share with capital deployment upside

The impact of slightly reducing our FY23 EPS forecast, but increasing our FY24 forecast by 3% to 27.7p and FY25 by 1% to 34.1p, combined with a discount rate increase from 10.7% to 11.1%, was to leave our valuation at 252p/share (which includes the accretive impact of share buybacks, announced to continue). Our valuation is 46% ahead of our FY23e NAV/share of 170.5p. A more liberal dividend policy is supportive and outperformance on the PEM initiative and tenancy capacity investments, including WDS, offers further valuation upside.

Operational turnaround and investing for future growth

H123 results a boost for future growth expectations

The standout of Helios’s H123 results was the return to profitability, providing clear evidence and support for forecast revenue and EPS delivery and demonstrating a solid underpin for our valuation of 252p/share. Capacity growth in prior years resulted in 28% GWP growth for H123, while further capacity growth during the period and indicative additions from syndicate pre-emptions supports our 10% forecast capacity growth for FY23, informed by company guidance. We expect this growth rate to be matched at least, and more likely exceeded, from FY24 onwards.

Syndicate underwriting operating results rebounded from a loss of £0.7m in H122 to a £10.4m profit in H123, thanks to a very healthy combined ratio of 88% (H122: 95%) and £6.8m delta in investment income (to £3.2m) as mark-to-market interest rate losses were replaced by substantially higher interest rates on financial assets (as expected). The 2023 year of account (YOA) performed particularly strongly during H123 as Helios’s conscious decision to reduce exposure to natural catastrophe (natcat) syndicates during FY22 bore fruit (please refer to our June 2023 Outlook note for more granularity on this). With the current hurricane season still in full force, we have been conservative in fully extrapolating the strong H123 experience and forecast a combined ratio of 90% for FY23.

Net group expenses during H123 increased from £2.8m to £4.4m on a pre-tax basis, largely due to the company’s new PEM initiative, which included investing in additional skills to improve the company’s capacity to evaluate, monitor and support its syndicates from an underwriting and capital management point of view. The success of this initiative will be measured in underwriting outperformance and capital efficiencies going forward. We have taken a conservative approach, with concrete delivery offering upside to our forecasts and valuation.

Net group expenses benefited from a healthy increase in reinsurance fees as the company benefited from increased profit commission on the 2021 and 2022 YOA. We forecast this trend to continue in future years. One area of disappointment during the period was the lacklustre investment income performance (zero vs our expectation of c £1.5m), despite higher interest rates. This was caused by losses experienced by its previous investment manager, but is likely to turn around strongly in H223 with the change in manager and investment mandate. We forecast a strong and rising contribution from group investment income in coming years, resulting in flat net group expenses and operational gearing as syndicate underwriting operating results continue to grow.

The net result of the interplay between syndicate underwriting operating results and net group expenses was for a marked turnaround in H123 EPS to 5.7p, from a 4.4p loss in H122 and a 4.9p loss in FY22. NAV increased to 154p compared to 152p as at 31 December 2022 and annualised return on NAV (RONAV) was 7.5%.

Healthy top-line growth with further increases well supported

Strong GWP growth of 28% was delivered thanks to 27% capacity growth in FY22 to £296.7m (£238.3m on a retained basis). Helios added a further 4.8% capacity growth in H123 thanks to the resumption of LLV acquisitions and its investment in WDS. The company concluded four LLV acquisitions, including two after 30 June 2023, adding £8.2m of capacity. Although the total consideration of £7.4m was below the Humphrey’s valuation, Helios did not generate negative goodwill from bargain purchases as it has in the past (where NAV raised exceeded purchase consideration). For completeness, it is worth noting that due to the conversion from IFRS to UK GAAP, the treatment of goodwill has changed from being accounted for in full during the period to being amortised over three years. While there was a small impact on H122 EPS (-4.4p loss vs -5.4p loss previously disclosed), FY22 EPS was unaffected and with remaining goodwill intangible asset small, the change has not affected our forecasts.

During H123, Helios became the capital provider of reference for WDS, acquiring £6m of capacity (c 24% of the total capacity of the syndicate). WDS provides fire risk cover to companies in California and, in addition to a rigorous underwriting process and a deliberate diversification of risks by location, is unique in its operating model of providing active fire protection and management (as a wildfire event unfolds) by utilising its fleet of fire engines (the largest fleet in the United States) and its large complement of trained staff. WDS offers another example of Helios using its tenancy capacity to improve its portfolio diversification and invest in new and growing risk classes not typically available through traditional syndicates (see our previous Outlook note for more detail).

In addition to the active growth in capacity from LLV acquisitions and WDS, Helios has also disclosed preliminary indications of syndicate capacity pre-emptions of £14.5m for 2023. While these are not as large as the exceptional £36.6m offered and accepted for 2022, it still represents 5% capacity growth, which is obtained by Helios without cost, only requiring the company to provide the funds at Lloyd’s (FAL) to back the business. We expect this source of organic growth for Helios to continue at least at the 5% level going forward. We have reduced our forecast for capacity growth through LLV acquisitions as fewer opportunities present themselves. However, we have allowed for increased capacity growth through the utilisation of tenancy capacity for investment in new risk opportunities, such as WDS. The net impact was to somewhat improve our free working capital generation forecasts.

We forecast FY23 growth in capacity of 10%, to £326m, of which £261m is forecast to be retained. While we believe that higher capacity growth in FY24 and thereafter can be achieved organically with the help of improved working capital production and Lloyd’s solvency management, we have taken a conservative view in our forecasts and limited capacity growth to 11% pa. There is upside potential to our EPS forecasts and valuation if Helios delivers capacity growth in excess of this.

Capital management and buybacks

Helios benefited from a meaningful improvement in syndicate solvency positions over H123, with a marked increase in solvency credits supporting its underwriting capital increase to £142.3m and resulting in a healthy surplus capital position of £23.7m as at 30 June 2023. The impact of this improvement was not fully reflected in the company’s free working capital position at the half-year, but will come into effect during the second half, supporting our free working capital forecast level at year-end.

The free working capital at half-year of £2m declined meaningfully from £10.3m at end-FY22 due to the costs associated with the LLV acquisitions, FAL provided for WDS and reinsurance costs (highly weighted to H1). This position is expected to benefit during H2 from a capital release (relating to the solvency credits above), as well as through the increased use of quota share reinsurance in some syndicates.

The increased working capital position will be used to fund the FY22 dividend, share buybacks and the FAL required to follow syndicate pre-emptions, and will be affected by regular operating cash flows during H223. After being very active in Lloyd’s auctions in recent years, we do not expect Helios to participate in any meaningful way this year and, as a result, we forecast free working capital to end-FY23 at £10.1m.

As the operational upswing for Helios continues, we forecast improved working capital generation from FY24, sufficient to fund our forecast 11% growth in capacity in FY24 and FY25, executed as a combination of following pre-emptions, deployment of further tenancy capacity and LLV acquisitions.

Year to date, Helios’s share price was affected by a forced partial sell-off by Odey Asset Management in thin markets. This impact was countered to some extent when the company embarked on a share buyback programme after 30 June 2023, buying 790,300 shares in the market for £1m at an average price of 127p/share, taking advantage of share price weakness due to the Odey-related overhang. This has been accretive to the tune of c 0.9% to our FY24 and FY25 EPS estimates. Despite the Odey reorganisation and the partial sell-off, which is now believed to be complete (with the remaining stake expected to be held by the successor fund managers), Helios announced on 10 October that is has authorised a further share buyback programme, returning up to a maximum of £1.5m to shareholders through repurchases at levels below the disclosed tangible NAV of 154p/share.

In addition, Helios confirmed a more liberal dividend policy, which resulted in a step-wise increase in the annual base dividend to be paid in 2024 (relating to FY23) from 3p/share to 6p/share. This could be further supplemented by special dividends at the board’s discretion. While this has not affected our dividend forecasts (as we allowed for an expected dividend pick-up), the announcement provides further support for our forecasts and valuation.

Financials

Exhibit 1: Helios’s segmental forecasts and key metrics

£m

FY21

H122

FY22

H123

FY23e

FY24e

FY25e

Capacity (for deployment in the next year)

232.8

254.4

296.6

310.9

326.2

361.1

399.6

Capacity added through acquisitions

34.9

0.0

5.7

8.2

8.9

6.5

7.2

Capacity added through pre-emptions

6.1

21.7

36.0

0.0

14.8

19.6

21.7

Tenancy capacity added

58.0

0.0

38.9

6.0

5.9

13.1

14.4

Retained capacity

171.2

172.2

238.3

244.5

260.9

288.9

319.7

Key parent company assets

 

 

 

 

 

 

 

FAL (required capital)

43.6

58.8

73.8

77.3

64.4

75.9

87.3

WAV (intangible assets)

59.8

59.8

60.0

61.5

69.6

78.0

87.3

Free working capital

16.2

13.0

10.5

2.0

10.1

11.6

11.3

Key syndicate assets

 

 

 

 

 

 

 

Insurance assets

110.3

127.6

152.2

182.3

295.4

354.2

407.5

Equity (members' balances at Lloyd's)

(3.5)

(6.9)

(5.1)

6.3

6.8

12.1

18.5

Group NAV (syndicate plus parent equity)

46.6

40.9

55.7

55.9

58.9

72.4

84.6

Syndicate level results*

GWP

134.6

124.1

250.9

160.5

329.3

361.8

399.8

Net earned premiums

92.7

60.0

156.6

97.3

217.7

254.3

296.2

Claims

(54.1)

(35.0)

(96.8)

(50.7)

(119.7)

(134.6)

(157.3)

Expenses

(32.9)

(21.7)

(54.2)

(34.9)

(76.2)

(85.4)

(99.9)

Underwriting result

5.7

3.3

5.6

11.7

21.9

34.3

39.1

Investment income on financial assets

0.0

(3.6)

(3.5)

3.2

9.0

11.2

13.0

Quota share reinsurance

(2.3)

(0.4)

(2.0)

(4.4)

(8.2)

(9.6)

(9.9)

Underwriting Operating result

3.4

(0.7)

0.1

10.4

22.6

35.9

42.1

Parent level results

 

 

 

 

 

 

 

Reinsurance income**

0.2

0.7

0.6

0.7

1.2

1.9

2.4

Investment income on FAL

1.2

0.1

0.6

0.0

1.8

3.5

4.1

Stop loss costs

(1.9)

(1.2)

(1.3)

(1.9)

(4.2)

(6.0)

(6.5)

Operating costs

(3.6)

(2.4)

(5.2)

(3.0)

(5.9)

(6.1)

(6.3)

Other***

(0.1)

0.0

(0.0)

(0.2)

(0.6)

(0.9)

(1.0)

Combined pre-tax profit

(0.6)

(3.4)

(5.2)

6.0

14.9

28.3

34.9

Tax

0.2

(0.5)

1.9

(2.0)

(3.7)

(7.1)

(8.7)

Profit after tax

(0.4)

(3.9)

(3.3)

4.0

11.2

21.2

26.2

WAV revaluation after tax

5.4

(0.3)

2.0

0.0

3.9

5.1

5.7

Total comprehensive income

4.9

(3.3)

(1.3)

4.4

15.1

26.4

31.8

NAV/share (p)

157.0

148.6

151.9

154.0

170.5

199.4

228.0

WAV/share (p)

88.2

88.2

78.7

80.6

92.3

103.5

115.8

EPS (p)

(0.8)

(4.4)

(4.9)

5.7

14.6

27.7

34.1

DPS (p)

3.0

0.0

3.0

0.0

6.0

13.7

16.8

Capacity growth

110.9%

67.9%

27.4%

22.2%

10.0%

10.7%

10.7%

EPS growth

(147.3%)

N/A

546.7%

N/A

N/A

89.7%

23.2%

RONAV/share

(0.5%)

(5.9%)

(3.1%)

7.5%

9.4%

15.9%

16.7%

RONAV/share plus WAV revaluations

5.5%

 

(1.1%)

 

14.0%

20.3%

21.0%

Group insurance ratios****

 

 

 

 

 

 

 

Claims ratio

64.5%

59.5%

63.7%

55.8%

58.4%

56.5%

56.3%

Expense ratio

43.3%

41.2%

40.9%

41.8%

42.1%

40.2%

39.6%

Combined ratio

107.8%

100.7%

104.6%

97.6%

100.5%

96.7%

95.9%

Underwriting portfolio insurance ratios*****

 

 

 

 

 

 

 

Claims ratio

58.4%

58.4%

61.8%

52.1%

55.0%

52.9%

53.1%

Expense ratio

35.5%

36.1%

34.6%

35.9%

35.0%

33.6%

33.7%

Combined ratio

93.9%

94.5%

96.4%

88.0%

90.0%

86.5%

86.8%

RoC (closed YOA)

3.3%

 

3.6%

 

6.3%

13.5%

15.7%

Year 3 (accounting year)

6.1%

 

3.9%

 

5.7%

8.4%

7.5%

Year 2 (previous year)

1.3%

 

4.4%

 

4.6%

9.1%

8.5%

Year 1 (underwriting year)

(4.2%)

 

(4.6%)

 

(4.0%)

(4.0%)

(0.3%)

Source: Helios, Edison Investment Research. Note: *Syndicate results before pre-acquisition and other parent items and after quota share reinsurance. **Quota share fees & profit commission. ***Goodwill on bargain purchase and pre-acquisition impact. ****Using consolidated premiums (after pre-acquisitions impact) and including parent items. *****Using syndicate excluding pre-acquisitions and parent impacts. Syndicate revenue is higher than consolidated revenue, but so are claims and expenses (pre acquisition impact).

Since we initiated coverage of Helios in February 2022, we have been very constructive in our forecasts for the company from FY23, with the FY24 and FY25 outlook particularly strong. While the unexpected rise in interest rates during 2022 delayed the expected return to profitability, it was stronger from a capacity and revenue growth point of view, providing continued support for our constructive outlook into FY25.

The FY22 results also introduced a new strategic direction for Helios with Martin Reith taking over as CEO, driving increased investment in capacity (eg the PEM initiative), focusing on risk diversification and risk mitigation (eg reduction in natcat exposure), investing in new and uncorrelated risk classes (using tenancy capacity), increasingly in a leading role, and signalling a reduced urgency for pursuing acquisitive growth (in part affected by fewer LLV opportunities). This new strategy introduced additional costs, affecting the FY23 outlook.

The strong set of H123 numbers has provided us with concrete evidence of the turn towards much better results for Helios going forward. While these results have increased confidence levels around our forecasts, we have not material increased our already constructive outlook. We have cut our FY23 EPS forecast by 3% to 14.6p due to the one-off impact of lower group investment income, without changing our positive expectation for H223. FY24 and FY25 EPS forecasts have been tweaked, with the former lifted by 3% to 27.7p and the latter by 1% to 34.1p.

We consider these minor adjustments to our forecasts as conservative in a number of areas, including: a) allowing for a deterioration in natcat experience in H223; b) limiting our capacity growth forecasts to 10% in FY23 and 11% thereafter; and c) making no allowance for improved underwriting experience and capital efficiencies resulting from the PEM initiative. We flag upside potential in these areas, which we will recognise if and when clear evidence emerges.

We forecast an NAV of 170.5p/share for FY23 and a RONAV (excluding any revaluation of the capacity fund) of 9.4%, rising to 15.9% in FY24 and 16.7% in FY25. Return on capacity for the 2020 YOA is forecast at 13.5% (in FY24), rising to 15.7% for the 2023 YOA (in FY25).

For the purposes of our valuation, we have used an average over-the-cycle return of 16.3%, which we use in our RONAV versus P/NAV valuation.

Valuation: An over-the-cycle return approach

Our base case valuation of 252p/share is unchanged from our previous valuation with modest EPS increases and the benefit of time value of money offset by an increase in our discount rate from 10.7% to 11.1% to account for a further rise in gilt yields. Our cost of equity of 11.1% is based on a risk-free rate of 4.6% (up from 4.2%), a risk premium of 6.5% and a beta of 1x.

Exhibit 2: Current valuation

FY20

FY21

FY22

FY23e

FY24e

FY25e

Over the cycle valuation (p)

252

 

 

 

 

 

EPS (p)

1.6

(0.8)

(4.9)

14.6

27.7

34.1

DPS (p)

3.0

3.0

3.0

6.0

13.7

16.8

NAV/share (p)

150.8

157.0

151.9

170.5

199.4

228.0

Valuation-implied P/E (x)

158.6

(335.4)

(51.9)

17.3

9.1

7.4

Valuation-implied dividend yield (%)

1.2%

1.2%

1.2%

2.4%

5.4%

6.7%

NAV multiple (x)

1.65

1.59

1.64

1.46

1.25

1.10

Source: Helios, Edison Investment Research

Our fair value for Helios is at a 1.46x multiple of our FY23 forecast NAV of 170.5p/share and at almost double the current share price. The valuation is well supported by expected FY24 EPS and dividends. The forward earnings multiple implied by our valuation is 9.1x in FY24, declining to 7.4x in FY25. Similarly, the dividend yield becomes very attractive from FY24.

Exhibit 3: Peer group P/NAV and dividend yield comparison

Source: Refinitiv, Helios, Edison Investment Research. Note: Priced at 5 October 2023. Helios’s NAV includes weighted average value of the capacity fund (WAV) at fair value, while NAV of peers does not.

While our valuation for Helios indicates a relative value on an implied forward earnings and NAV multiple basis, the company undershoots the peer group on dividend yield. This is because Helios chooses to retain most of its earnings to fund capacity growth.

Exhibit 4: Financial summary

2020

2021

2022

2023e

2024e

2025e

Accounts: IFRS, year-end: 31 December; £’000s

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue*

52,594

70,615

148,345

213,476

250,652

293,891

Net insurance claims and loss adjustment expenses

(51,996)

(70,149)

(149,667)

(194,435)

(218,077)

(254,604)

Gross Profit

598

466

(1,322)

19,041

32,575

39,287

EBITDA

(924)

(1,864)

(5,169)

14,930

28,318

34,876

Operating profit (before amort. and excepts.)

(924)

(1,864)

(5,169)

14,930

28,318

34,876

Intangible Amortisation

0

0

0

0

0

0

Exceptionals

1,260

1,219

0

0

,0

,0

Other

(1,522)

(2,330)

(3,847)

(4,111)

(4,257)

(4,411)

Operating Profit

336

(645)

(5,169)

14,930

28,318

34,876

Net Interest

Profit Before Tax (norm)

(924)

(1,864)

(5,169)

14,930

28,318

34,876

Profit Before Tax (FRS 3)

336

(645)

(5,169)

14,930

28,318

34,876

Tax

(35)

211

1,852

(3,732)

(7,079)

(8,719)

Profit After Tax (norm)

(959)

(1,653)

(3,317)

11,197

21,238

26,157

Profit After Tax (FRS 3)

301

(434)

(3,317)

11,197

21,238

26,157

Average Number of Shares Outstanding (m)

25.3

50.4

72.0

75.8

75.4

75.4

EPS - normalised (p)

1.6

(0.8)

(4.9)

14.6

27.7

34.1

EPS - normalised fully diluted (p)

1.6

(0.8)

(4.9)

14.4

27.3

33.7

EPS - (IFRS) (p)

1.6

(0.8)

(4.9)

14.4

27.3

33.7

Dividend per share (p)

3.0

3.0

3.0

6.0

13.7

16.8

Gross Margin (%)

1.1%

0.7%

(0.9%)

8.9%

13.0%

13.4%

EBITDA Margin (%)

(1.8%)

(2.6%)

(3.5%)

7.0%

11.3%

11.9%

Operating Margin (before GW and except.) (%)

(1.8%)

(2.6%)

(3.5%)

7.0%

11.3%

11.9%

BALANCE SHEET

Fixed Assets

220,937

380,720

567,249

752,493

863,112

983,933

Intangible Assets

31,601

60,890

61,434

71,076

79,482

88,751

Tangible Assets

104,059

165,986

279,803

321,685

353,494

400,467

Investments

85,277

153,844

226,012

359,731

430,136

494,714

Current Assets

8,495

24,624

25,300

35,800

39,070

38,988

Stocks

0

0

0

0

0

0

Debtors

0

0

0

0

0

0

Cash

8,495

24,624

25,300

35,800

39,070

38,988

Other

0

0

0

0

0

0

Current Liabilities

7,293

4,699

22,488

23,237

24,060

24,967

Creditors

3,293

4,699

7,488

8,237

9,060

9,967

Short term borrowings

4,000

0

15,000

15,000

15,000

15,000

Long Term Liabilities

171,590

293,156

452,883

635,072

726,283

824,572

Long term borrowings

0

0

0

0

0

0

Other long-term liabilities

171,590

293,156

452,883

635,072

726,283

824,572

Net Assets

50,549

107,489

117,178

129,984

151,838

173,381

CASH FLOW

Operating Cash Flow

(11,629)

(16,350)

(24,798)

16,817

18,514

22,935

Net Interest

(1,474)

(1,566)

(2,870)

(6,120)

(11,274)

(13,295)

Tax

(312)

(675)

-166

(3,732)

(7,079)

(8,719)

Capex

(186)

(2,983)

-696

0

1711

1929

Acquisitions/disposals

1,415

(11,446)

589

(298)

(5,352)

(5,924)

Other investing activities

1,474

1,566

2,870

6,120

11,274

13,295

Financing

13,170

49,601

27,781

0

0

0

Dividends

0

(2,018)

(2,034)

(2,286)

(4,524)

(10,304)

Net Cash Flow

2,458

16,129

676

10,500

3,269

(82)

Opening net debt/(cash)

4,037

4,495

24,624

10,300

20,800

24,070

HP finance leases initiated

0

0

0

0

0

0

Change in borrowings

(2,000)

4,000

(15,000)

0

0

0

Closing net debt/(cash)

4,495

24,624

10,300

20,800

24,070

23,988

Source: Helios, Edison Investment Research. Note: *Shown after pre-acquisition impact and parent reinsurance result, investment income, costs and other items (see Exhibit 1 for a segmental view of syndicate result and parent result).


General disclaimer and copyright

This report has been commissioned by Helios Underwriting and prepared and issued by Edison, in consideration of a fee payable by Helios Underwriting. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Helios Underwriting and prepared and issued by Edison, in consideration of a fee payable by Helios Underwriting. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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